Technical Analysis

High Five

Yoganand D | Updated on March 17, 2014 Published on March 16, 2014






SBI (₹1,653.5)

The stock struggled to surpass its key resistance at ₹1,700 last week and continues to test it. This level is an important Fibonacci retracement level of the prior downtrend. Only a conclusive breakthrough of ₹1,700 will alter the stock’s medium-term downtrend and push it higher to ₹1,800 and then to ₹1,900 in the weeks ahead. We restate that traders with a short-term perspective can initiate long positions only on such a breach with a stop-loss at ₹1,700.

Inability to surpass it can drag the stock down to supports at ₹1,590, ₹1,525 and ₹1,475 in the near term. Investors with a medium-term perspective can take the cue on such a breakout and go long with stop-loss at ₹1,600.

ITC (₹347)

The scrip advanced 2.8 per cent last week, gaining three weeks in a row. The short-term trend has been up since the February 2014 low of ₹311. This uptrend has been backed by good volumes. The stock is hovering well above its 50- and 200-day moving averages.

Traders can continue to hold their long position with revised stop-loss at ₹335. Following a minor pause at ₹348, ITC can reach the price target of ₹355 in the short term. On the downside, it has to decisively breach the key support at ₹332 to mar the uptrend and pull it down to ₹320. Subsequent important support is at ₹308. Investors with a medium-term horizon can hold the stock with stop-loss at ₹325. A decisive jump above ₹355 can push ITC to ₹380.

Infosys (₹3,389.4)

Infosys plummeted 9.4 per cent last week, conclusively breaking its key support at ₹3,450. Moreover, the stock has closed way below its 21- and 50-day moving averages. The short-term trend is now down. Indicators in the daily chart feature in the bearish zone, implying downward momentum. Traders can sell the stock in rallies while maintaining stop-loss at ₹3470. Downward targets are ₹3,300 and ₹3,200. Significant resistances to watch are pegged at ₹3,500 and ₹3,650. The stock’s medium-term trend will remain up as long as it trades above the important support at ₹3,000. Investors can consider holding their long positions with a stop-loss at ₹3,000.

Reliance Ind (₹886.1)

Last week, the stock rose almost 2 per cent. Nevertheless, it is testing an important resistance zone in the range between ₹890 and ₹900. Traders with a short-term perspective should tread with caution as long as this resistance restricts the stock. Only a decisive break of this zone will push RIL northwards to ₹925 in the near future. But, inability to break past will confine the stock to moving sideways between ₹800 and ₹900. Immediate key supports are placed in the ₹840-850 range and at ₹820. Investors with a medium-term perspective can buy the stock with a stop-loss at ₹800. The medium-term trend continues to be sideways in the band between ₹760 and ₹930.

Tata Steel (₹341.7)

Tata Steel tumbled 7.6 per cent over the week. The Holi week will keep the stock under pressure. The formation of a descending triangle pattern is evident since early February 2014. The stock is currently testing a significant support in the band between ₹335 and ₹340. An emphatic break will lead to resumption of the short- to medium-term downtrend that has been in place from the January peak of ₹435. Traders can initiate short positions on such downward break with a stop-loss placed at ₹340. Targets are ₹330 and ₹320. Key resistances to observe in the coming week are at ₹356 and ₹370.

Published on March 16, 2014
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